Boris Schlossberg
BK Asset Management
Risk-off flow resume
Markets starting to appreciate the economic toll of virus
Nikkei 1.08% Dax -1.06%
UST 10Y.974%
Oil $46/bbl
Gold $1645/oz
BTCUSD $9099
Europe and Asia:
No Data
North America
No Data
It’s been a slow drip down in early European trade today as equity markets gave up their early Asia session gains and moved lower all morning on the realization that the coronavirus impact may be a long and tedious battle.
The rate of infection in the US appears to be ticking up with California now declaring a state of emergency as it monitors more than 9000 possible cases. Airlines have continued to issue warnings as travel may be off by as much 70%, And with swaths of China and parts of Europe still on effective lockdown, the rebound in economic activity may take longer than hoped.
All of this has put a damper on investor sentiment and futures were pointing to a 2% down open after yesterday’s 4% rise. The up-down nature of the markets will no doubt continue but the prospect of fresh will grow dimmer with every passing day as investors begin to take the true toll of the virus on economic activity.
In FX the euro continued to push higher rising to 1.1177 in morning London dealing. The move is less a function of confidence in the euro than flow out of dollar assets. With markets pricing in yet another 50bp cut by the Fed the one attraction of US assets – their positive yield – is losing much of its luster.
If the coronavirus forces all the G-3 rates to normalize around zero much of the greenback’s advantage will evaporate. Add to that the fact that euro is now a funding currency in many risk trades that will need to be unwound and that CFTC positioning still suggests a strong short bias and you have the perfect recipe for a vertical move to 1.1400 or higher.
Past performance is not indicative of future results. Trading forex carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade any such leveraged products you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading on margin, and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
EUR/USD holds above 1.0650 amid renewed selling pressure in US Dollar
The EUR/USD pair edges higher to 1.0672 during the early Thursday. The recovery of that major pair is bolstered by renewed selling pressure in the US Dollar and a risk-friendly environment.
GBP/USD remains capped below 1.2470, eyes on US data
The GBP/USD pair trades on a softer note around 1.2450 on Thursday. The softer UK inflation data prompted the expectation that the Bank of England will start lowering interest rates in the coming months, which weighs on the Pound Sterling against the Greenback.
Gold rebounds on market caution, aims to reach $2,400
Gold price recovers its recent losses, trading around $2,370 per troy ounce during the Asian session on Thursday. The safe-haven yellow metal gains ground as traders exercise caution amidst heightened geopolitical tensions in the Middle East.
Manta Network price braces for volatility as $44 million worth of MANTA is due to flood markets
Manta Network price was not spared from the broader market crash instigated by a weakness in the Bitcoin market. While analysts call a bottoming out in the BTC price, the Web3 modular ecosystem token could suffer further impact.
Investors hunkering down
Amidst a relentless cautionary deluge of commentary from global financial leaders gathered at the International Monetary Fund and World Bank Spring meetings in Washington, investors appear to be taking a hiatus after witnessing significant market movements in recent weeks.